Remarkable Retail

What We (Still) Get Wrong About Physical Retail--And Why It Matters

Episode Summary

This week we go guest free to tackle some of the more pernicious misperceptions, missteps, and false narratives that continue to get in the way of retailers' making the strategic progress they so urgently need. As the Covid sales bump disappears and consumer demand wanes we will--as Warren Buffet famously said--"get to see who's been swimming naked." Without aggressive action retailers stuck in the unremarkable middle will soon face a harsh reckoning.

Episode Notes

This week we go guest free to tackle some of the more pernicious misperceptions, missteps, and false narratives that continue to get in the way of retailers' making the strategic progress they so urgently need. As the Covid sales bump disappears and consumer demand wanes we will--as Warren Buffet famously said--"get to see who's been swimming naked." Without aggressive action retailers stuck in the unremarkable middle will soon face a harsh reckoning.

Among the topics we take on is the false notion that physical retail is back, the danger of treating physical and digital sales as a zero-sum game, the changing role of brick-and-mortar locations, and the need for many retailers to end their "one-size-fits-all' real estate strategies to reconfigure in favor of a more hybrid approach.

But as is our custom, we start with a fast-paced analysis of the most important retail news of the week, including what the latest US monthly sales report says about the slowing pace of spending and winning and losing merchandise categories. We then take on mostly disappointing earnings from Walmart, Target, Home Depot, and TJX, before turning our attention to the emerging remarkable growth story of On, the performance running and apparel brand that is far from a wobbly unicorn.

About Us

Steve Dennis is an advisor, keynote speaker and author on strategic growth and business innovation. You can learn more about Steve on his       website.    The expanded and revised edition of his bestselling book  Remarkable Retail: How To Win & Keep Customers in the Age of Disruption is now available at  Amazon or just about anywhere else books are sold. Steve regularly shares his insights in his role as a      Forbes senior contributor and on       Twitter and       LinkedIn. You can also check out his speaker "sizzle" reel      here.

Michael LeBlanc  is the Founder & President of M.E. LeBlanc & Company Inc and a Senior Advisor to Retail Council of Canada as part of his advisory and consulting practice.   He brings 25+ years of brand/retail/marketing & eCommerce leadership experience, and has been on the front lines of retail industry change for his entire career.  Michael is the producer and host of a network of leading podcasts including Canada’s top retail industry podcast,       The Voice of Retail, plus  Global eCommerce Leaders podcast, and The Food Professor  with Dr. Sylvain Charlebois.    You can learn more about Michael   here  or on     LinkedIn. 

Be sure and check out Michael's latest venture for fun and influencer riches - Last Request Barbecue,  his YouTube BBQ cooking channel!

Episode Transcription

Michael LeBlanc  00:05

Welcome, Remarkable Retail podcast, Season 6, Episode 19. Presented by MarketDial. I'm Michael LeBlanc.

Steve Dennis  00:11

And I'm Steve Dennis.

Michael LeBlanc  00:13

We have a solo episode, as we would call it for the people, today, Steve. What we still get wrong about physical retail.

Steve Dennis  00:22

Yes, we haven't. We haven't done a solo episode that wasn't some kind of recap, I think in a few months. One of the very nice things has been that it seems like most of the people we asked to come on as guests actually say yes, in other words our yield, our yield was better than usual. So, so that let us, got us a little bit boxed out in terms of some non-guest episodes, but, but here we are talking about, maybe, some myths, misconceptions, and why they matter.

Michael LeBlanc 00:53

For the listeners looking ahead, we have more great insights and interviews coming up from our time in ‘Barthelona’, as they would say in Barcelona, and a very special guest coming up in a few weeks, someone whose work I've really admired and, and devoured Jason Del Rey.

Steve Dennis  01:08

Yeah, Jason's got a book coming out about Amazon and Walmart, and just kind of the evolution of retail. Haven't quite got our preview copy yet, but I suspect that will show up in the mail any day now and I'm really, really looking forward to reading it and talking to him. He's got great perspective, and has been, let's say, along for the ride in retail and digital transformation for, for quite some time.

Michael LeBlanc  01:35

Absolutely. All right. Well, let's get to the news. Let's start at the US monthly sales, up 2.9% is that, you know, is that month over month, a year over year, break that down for us, because we do seem to repeat, year over year being more important is 2.9% real, what's going on?

Steve Dennis  01:54

That is a year over year number, I have to really resist my, my little hissy fit about how these numbers get reported. So, I'm just gonna move on from that. I'm gonna let it go. Yes, that is the year over year number. And that is for the US and that is across a spectrum of categories. So of course, we see different results depending upon the category of merchandise, but I think the big headline here really is this continues or we continue to see deceleration in growth and that, apparently is a function of a continuing shift to essentials, the effect of inflation, interest rates, people spending on travel, you know, big ticket sales being affected by home sales being slow the pull forward, you know, a lot of things we've talked about. 

Michael LeBlanc  02:45

Yeah, yeah, yeah.

Steve Dennis  02:45

In the past. But I would say the overall picture.

Michael LeBlanc  02:47

Which still, by the way, I mean, you just rattled off a bunch of things, but I just have to interject that often. When I'm looking at analysis, they're forgotten. Like the, this is the first year in four years where people least North American can travel unencumbered and we bought a lot of stuff during COVID and I think it bears repeating. So thank you for repeating it because I think it gets, I'd say glossed over when people go oh, you know, like and we'll be talking about later Home Depot sales are off year over year. Yeah, because they sold like a million patio heaters and you only need so many patio heaters, right?

Steve Dennis  03:20

Yeah. Yeah. I mean, I think it's, I think it's complicated, but, but clearly there are pressures on consumer spending in general, but yes, there are a lot of other factors that are determining the pace of spending, but definitely an overall slowing down. Now, when you look down kind of beneath the hood a little bit. Really the only winner I would say as a category and this is one that's been I think, in this category for like a year or maybe more, is health and personal care. Again, the growth rate, they're slowing a little bit up about 6% I think we'd seen numbers like eight or nine most of last year, then you've got the very mediocre numbers, general merchandise stores that stores like Walmart and Target Costco, et cetera and only have about four, which is probably less than inflation. 

Steve Dennis  04:11

And then I thought this was interesting. Grocery and beverage stores were only up 3%. I don't know if that's because I mean, some of that is people going out more or traveling more and so they're not eating at home, but that's where we've seen the greatest amount of inflation that definitely suggests traffic being down, items being down. Then we've got a bunch of losers so to speak big L on losers, laggers. Yeah, maybe that's a nice way of saying it. Clothing stores continue to be weak down about 4% home category both Home Depot kind of home as you alluded to, down like 6% electronics and appliance stores down eight furniture home furnishings down close to 9% sporting goods which had been a pretty strong category down about nine. So again, I think this is a lot of that pull forward spending we've, we've talked about but, but definitely a picture of consumers trading down, slowing down, and maybe changing priorities.

Michael LeBlanc  05:09

Change of priorities. I mean, we, you and I talked about this over the years of COVID era that, you know, eventually when, fortunately, this thing kind of simmers down, that people's focus will shift to more experiences than then things. So, I think, I think we're seeing that. So, I just wanted to reiterate that if I haven't done that already half a dozen times in this episode. We're kind of in earnings, the earnings cycle. So, let's talk about some of the big news out of a couple of the biggest retailers this week. Let's start with Walmart.

Steve Dennis  05:37

Yeah, we are definitely getting into the cycle here. I think we've got department stores and some others that'll be reporting next week but yeah, we got the two biggest retailers in the US, Walmart and Target, Walmart was stronger. Not amazing, but quite solid, their sales were up about 7% and whereas Target was pretty much flat. I think the thing with Walmart, if you want to just kind of compare and contrast with Target is, Walmart is, as many people probably know, the biggest grocery store in North America, their strength was very much in grocery and essentially more essential, essentially more essential items.

Michael LeBlanc  06:15

Essentially more essential, yeah.

Steve Dennis  06:17

Essentially more essential items, they highlighted weakness in more discretionary share type of spending, Targets and essentially the same thing. But Target does not have nearly the essential grocery and balanced the sale, that, that Walmart does, they've got more discretionary type items. So, Walmart was clearly the winner in the battle between the big two and both of them gave a pretty tepid outlook for the, for the near future, in any event.

Michael LeBlanc  06:48

All right. So that's, that's Walmart and Target. Now, let's, I mentioned them already. Let's talk about Home Depot. 

Steve Dennis  06:52

Yeah, this was a pretty, pretty weak report from Home Depot. Again, this, this kind of continuing weakness in all things home, they had their first comparable store sales drop in several years, I think I forget the exact number of quarters, but their sales were down over 4% and their earnings took a bit of a hit as well. They basically guided that they expect their sales, their customer sales, to be down two to five percent for the fiscal year. So, between Target and Home Depot, you've got two retailers, huge retailers that are, that are guiding to lower sales. We also got a couple of apparel players, TJX, the Off-Price retailer and Ross Stores. Both were pretty mediocre. TJX overall had sales up only 3%. It doesn't seem like generally speaking customers are in much mood to buy clothing pretty much across the board. 

Steve Dennis  07:48

On a positive side, they did have their gross margin improve, folks may remember that many retailers were sitting on a ton of inventory. 

Michael LeBlanc  07:55

Yeah, yeah, yeah. 

Steve Dennis  07:56

And TJX was, was moving through that the last couple of quarters. So, it looks like that stabilized a little bit. The other quick thing with TJX is some folk may know they own this chain called HomeGoods and that was really the laggard in their-

Michael LeBlanc  08:07

HomeSense in Canada.

Steve Dennis  08:08

Their portfolio. Yes, HomeSense and HomeGoods. Their comps were down 7%. So again, not, not a lot of spending on soft or hard home products. Then Footlocker, which I think we talked about a couple months ago, got this new strategy they've announced. Well, it's definitely not taking hold yet though. It's quite early.

Michael LeBlanc  08:28

Early days, early days, yeah.

Steve Dennis  08:29

Very early days, but their comparable store sales were down 9% So apparently nobody wants to buy footwear, except for an exception that we'll talk about in a moment. 

Michael LeBlanc  08:37


Steve Dennis  08:38

And their net income went down. They did have their inventory go up year over year by 25%. So, you know, sales down 9% inventory you have 25%, I would say kids start looking for some markdowns this summer.

Michael LeBlanc  08:51

And what would you call it they're kind of being de-levered, right, I mean, their sales are down they probably brought in inventory to match prior sales and-

Steve Dennis  08:58


Michael LeBlanc  08:59

So, they've gotta, they've got some, some running to do, some catching up to do. All right. Well, let's talk about a sturdy unicorn. So here is a story and it's actually a good, a good one to talk to you right after Footlocker. Let's talk about On Running, which is, really, I didn't know that much about On Running. You brought them to my attention and the more I look at them, the more I'm impressed.

Steve Dennis  09:24

Well, it is, it is literally a remarkable story and as as regular listeners will know we often point out the wobbly unicorns these, these brands that were started in the last 10 to 15 years generally vertically integrated, generally raised a lot of money to grow but have had a hard time making money. Well, On uni-. On unicorn haha, On Running has no such problems, at least so far. They had a blowout quarter. Their sales are up 80% And they're already a billion dollar plus business so that is not [inaudible]

Michael LeBlanc  10:00

I was going to say, how big are, you know, that's, you know, it's one thing if you're a small business with those kinds of comps, but billion dollars, that's real money.

Steve Dennis  10:07

Yes, they are in a number of countries. So, this is a fairly diverse business at this point still comparatively small but gross margin up, they've had growth in both wholesale and direct-to-consumer their net income tripled their market cap is now over $8 billion. So they are almost a Deca-unicorn, I guess, one could say and what I think is kind of interesting, I don't know that they really consider themselves a digitally native vertical brands, because they really followed kind of a classic fashion, or apparel brand strategy of very much being in wholesale channels as a way to grow and build awareness, in addition to supplementing with direct-to-consumer.

Steve Dennis  10:55

And I think you can contrast that at least until fairly recently, to a number of these digitally native brands, which really, you know, didn't want to have store presence, generally stayed away from wholesale, because they thought that somehow it was going to be more profitable, being able to kind of control the whole thing, but what On has done, I think very much like Yeti, you know, another brand has grown quite quick, quickly by balancing wholesale with direct-to-consumer and so that seems to be a very, very successful strategy. If you want to contrast this with a brand we talked about a couple of weeks ago, Allbirds. You know, start, started around the same time Allbirds went very much direct-to-consumer, not wholesale until fairly recently, and now On has become really kind of a hot shoe among entrepreneurs as well as serious runners, they are on quite a tear.

Michael LeBlanc  11:47

All right, well, let's you and I wear them on the stage at the Lead and be hip, hip with the, hi with the crowd.

Steve Dennis  11:54

Might take a little bit more for me, but baby steps. 

Michael LeBlanc  11:57

Gets us a little bit closer. All right. Well, that's a quick look at the news. Now just before we dive into our "What we still get wrong about physical retail" episode, let's hear from our presenting sponsor.

Michael LeBlanc  12:08

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Michael LeBlanc  12:41

All right, well, let's get to our main event, so to speak, what we, the royal we still get wrong about physical retail. My first question is, you know, people have been doing physical retail for a long, long time. Why are we still talking about this? 

Steve Dennis  12:56

Well, I think my overall motivation for this is I still believe, and I'll talk about some examples as we get further into it, there are a lot of myths or misconceptions or false narratives or just weird ways that people think about physical retail that may lead them in the wrong direction caused them to make some strategic mistake. So, my hope is we can kind of clear that up a little bit and talk about why some of these misconceptions actually matter. It is a bit of a companion piece to something that we did back, way back now in November of 2021. It's about what we get wrong about e-commerce. So, the same kind of approach just anchored more on brick and mortar.

Michael LeBlanc 13:38

Yeah, and it's a bit more, I, what should I call, nuanced because I mean, you and I, we aligned very early on when we met around the whole media canard around the retail apocalypse, but we go a lot deeper, with a lot more subtlety or a lot more different things that are going on in different ways. Question for you. Actually, question for, that we asked ourselves before we came up with this episode is why now, like, is there any urgency and I think I think you had, you made a pretty compelling case.

Steve Dennis  14:07

Well, I think there's two kinds of urgency. One is, and there was an article in the Wall Street Journal that kind of spoke to this, is that with this growing economic pressure, you know, when we talk about it, as you know, the tide is going out. It's going to reveal some weaknesses that were perhaps masked, either by extraordinary-, extraordinarily low interest rates, stimulus payments, you know, consumers just in general spending tons of money on all those things. Yeah, for the most part, those kinds of dynamics are going away, in addition to some of the things we talked about at the top of the show, in terms of, you know, inflation and higher interest rates, et cetera, et cetera. 

Steve Dennis  14:48

So, I think economic pressure is going to reveal more fragility on the part of many retailers. I also think that, and this is just a question of, the sooner the better, I guess. that you start, but to the extent that retailers like we can just talk about Bed Bath and Beyond, let's say, you know, clearly, they needed to make a lot more changes much more, more quickly. So if you're a retailer that is experiencing some of the struggles that folks like, Bed Bath and Beyond have experienced in recent years, well, you may need to get much more aggressive, both in terms of the degree of change, but the pace of change around your transformational efforts, because, you know, you're getting more headwinds than, than tailwinds at this point.

Michael LeBlanc  15:31

Yeah, well put. All right, so let's, let's get into the end of the details. Well, I already mentioned it a little earlier on a we kind of we should probably start for, I guess, context at the retail apocalypse-canard, talk, speak, speak about that. 

Steve Dennis  15:45

Yeah, just, just very quickly, because I think at this point, most people realize that there's, really never was a retail apocalypse, or it was very focused into some particular areas. You know, here in the US anyway, sales through physical stores have been positive for 14 straight years, 1000s of stores continue to be open. Last more, or last year, we actually had more stores open than closed for the first time in a while. So, you know, I think we just kind of have to get that out of our head, it only really matters to the extent you still basically believe this and therefore, your conclusion is, I shouldn't invest in physical retail. 

Steve Dennis  16:29

Now, that may be the case if you have a weak value proposition, but-

Michael LeBlanc  16:32


Steve Dennis  16:33

Even when we're speaking and I guess one of the things I glossed over and talking about Walmart sales, was that Walmart had their ecommerce increase about 27% and we've been seeing a lot of retailers that are reporting decreases, and a lot of that is really around having invested in e-commerce for sure, but really investing in things like online pickup and store and, and shipped from the store. So we've seen Target and Walmart and lots of others, who decided to invest in their stores as kind of the hub of omni-channel fulfillment. So, if you believed that everything was moving online, you would not have invested in your stores, you would not have seen them as assets, and you would have really missed out on business opportunities.

Michael LeBlanc  17:18

Now, now, the more contemporary myth, I should say, or the way that people are phrasing it is the retail is back, you know, if you, if you believe there's an apocalypse, I guess you believe that retail is back, but now we're into a different phase of being-back-ness, I suppose you could say, all the way back circling back to the beginning of the episode. How are you thinking about the state of retail and the trends that, that we're in today?

Steve Dennis  17:42

I think both at the World retail Congress where we were together, as well as at Shoptalk Europe and Shoptalk in Las Vegas a few months ago, I heard people say physical retail is back a lot and so I wondered, I mean, that sort of feels true, I guess, and certainly physical retail is back relative to the depths of the COVID. So, if we go back to when stores were closed, or people were not trafficking stores, you know, that's true. But is retail traffic and sales higher in the last year or two and broadly speaking, the answer is no. If you look at traffic across the spectrum of categories, I went in and looked at some of the places or, our friends at data, for the most part, traffic in most categories is flat or down. 

Steve Dennis  18:31

In some cases, it's down quite a lot, particularly apparel stores, and which, you know, really kind of lines up with the, the numbers we went through at the top of the episode. You know, the truth is, yes, there are some retail formats that are gaining traffic, but broadly speaking, physical retail is relatively flat in terms of sales growth, down in traffic, people are tending to concentrate their sales in fewer stores. 

Steve Dennis  19:00

So, and I would say generally, we've got, obviously the near-term headwinds that are likely to keep traffic quite muted for you know, who knows, six months, 12 months, but I think the overall picture generally, is that traffic to physical retail is is not coming back as a broad statement. So why does that matter, well, if you're feeling sanguine, because somehow everybody's back to shopping in stores, and you think that's going to be the thing that's going to drive you forward, well, maybe be a little bit more careful because again, while that's true, in some instances, broadly speaking, traffic is down and that means you've got to do a much better job of differentiating yourself to try to win traffic back if that's a possibility or you've got to do a much better job of converting the traffic that you were able to get and you know, try to drive up average ticket and net promoter scores and all those kinds of outlets.

Michael LeBlanc  19:53

I love that point because, you know, I remember in the pre COVID days when we were thinking about traffic being down that retailers and our advice. I know my advice to retailers was to turn your minds to getting more people in the store to buy more things versus trying to get more people into the store and you know, that's money well spent. It's like, not unlike ecommerce, right. Don't worry about driving traffic to the homepage, get people checking out. Is there room, is there room your thinking for the COVID bump, like the comp store issue, in other words, here in Canada, a lot of stores were very locked down, we had Omicron, which we almost forget about it, but it was like it's just under over a year ago and there was a big rush back to the stores in the spring and summer, because there's some pent up demand. Are we seeing a bit of that, just it's a short-term thing, I don't think it changes your narrative, but is there room in your thinking for that?

Steve Dennis  20:43

Yeah, I mean, I think just like people are eager to go back out traveling, I think we're seeing some people just, you know, wanting to get back into certain kinds of stores, because they haven't been doing it or haven't been doing it as frequently. So I think there's a little bit of that but I think, you know, every week, every month that goes by there, there's less of that kind of revenge spending kind of thing, as well as just you know, what we talked about earlier that there's just not as much spending power that people have. The other thing too is, you know, inflation has obv-, obviously, lots of, of negative consequences, but it can also make your sales numbers look better, right, if there's 7% inflation based on your number, you look like you're running an increase, but in fact, you're not necessarily really gaining share or, or performing well, but I think the big picture issue, which, you know, some people may think fights a little bit against what I said with the retail apocalypse, but it is still the case. In, particularly in the US, I think a little bit more in Canada and the UK, there is still overall a huge, a huge mismatch between the supply of real estate, and the demand. 

Michael LeBlanc  21:55

I was gonna say, is that, is that still the case, because of, that certainly was a big part of the narrative that became the retail apocalypse narrative that there was just too, you know, we saw pictures of, you know, The Walking Dead malls kind of thing, right?

Steve Dennis  22:11

Yeah, there's, there's definitely been some rationalization of that. So, the, the excess is not quite as pronounced as it was going into COVID. So, it's reconciled, or, or kind of reset a bit, but it's really a question and this is, you know, what I've said a million times that the, the apocalyptic part is really about the collapse of the unremarkable middle, it's, it's the poorly positioned real estate or the poorly positioned retailers. They're the ones that have a problem and when dollars are getting spread-out, over-all sorts of retailers, and then just in general, if the economy continues to be weak, you just have more real estate that's going to be underwater, essentially. Yeah, so- 

Michael LeBlanc  22:55

What did you describe it as one time, kind of a showroom for Caterpillar bulldozers or something? I think you said that.

Steve Dennis  23:00

Well, yeah, there's the right, there's the, yeah, you might want to, if you're thinking about buying Macy's stock, you might want to buy a bulldozer stock, because there's clearly lots of space chasing too little demand and what it will take, in some cases, is the amount of money it would take to re configure that real estate to a higher and better uses is doesn't make pretty, pretty tough numbers and it's, in fact been made worse because now interest rates are, are 5%, roughly higher. So, you know, the interest rate thing and the tepid demand broadly, you know, from a macroeconomic perspective, you know, maybe that's only a year phenomenon but the longer term trend is that if you were one of these retailers that stuck in the middle, à la Bed Bath and Beyond à la, you know, lots of other, Kohls, et cetera. Your life is not getting any easier and I would argue in many cases, it's about to get much tougher.

Michael LeBlanc  23:31

À la, la, la. Let's talk about, talking about confusion, or I don't know how to describe it, but this intersection between physical retail and e-commerce and, and I still get questions about, you know, I'm worried about cannibalization as if it's a zero-sum game, but it really is, expand on that, expand on that for us.

Steve Dennis  24:12

Well, I'm still surprised. I mean, I've been saying, you know, silos belong on farms and breaks the blur and all these kinds of things for, for 10 plus years. So, this is not a new idea but yes, there still are. I was just with a retailer in the last couple of weeks. There still are retailers that really measure physical store performance and online performance vary independently. The reality is, in most cases, consumers are active in both channels if we want to use the channel terminology that physical drives, e-commerce, e-commerce drives or digital drives physical you know, so there's a lot of interplay between the different channels and if you tend to measure your store performance and your online performance in isolation, then you're very likely and I've lived through a bunch of this, both companies I've worked for as well as companies I've consulted to, you may actually make some pretty dumb decisions you might miss allocate your marketing spending. 

Steve Dennis  25:17

So, for example, if you, if you have your e-commerce channel responsible for all digital advertising, they will and you know, focused on their online sales, they will under invest in online advertising because they're not getting credit, so to speak, for physical sales. Similarly, you might close a physical store, if you just measure it's for wall profitability, and then discover as many retailers have that when you close the store, your online business actually goes down because customers are using it for showrooming or its marketing or, you know, online-, buying online pickup in store, you know, thinking about physical versus e-commerce is a zero sum game. 

Steve Dennis  25:57

I guess you focus really on the wrong thing, which is kind of this intramural warfare, as opposed to how are you going to grow share of wallet, how are you going to grow total trade area performance, regardless of where the customer happens to ultimately transact plus, the other thing, which I know, you've heard me say many times is, we have to remember that when we hear these numbers about e-commerce grow through commerce sales, that is typically where the product is ordered. It's not necessarily how it's fulfilled and so again, you could say, well, gee, I'm gonna keep growing ecommerce, I'm not gonna spend any money on stores, but you won't get that sale, if the customer wanted to go pick it up or if they are using the store as a fulfillment point for e-commerce orders or returns and those kinds of things. So you really have to look at it all together and again, I'm still shocked that there are pretty sophisticated companies that aren't doing this.

Michael LeBlanc  26:52

I have an anecdote for you to kind of bolster that, I was, you know, it was Mother's Day, last week, and I knew what I wanted to get my mom but of course, I didn't get around to it, but there, there I am Sunday morning and I'm looking for a very particular kind of shoe. And lo and behold, of course, I go on their website, and they, they, they offer in store pickup, and I'm like, wonderful and I check for the shoe and it's in stock and it's in stock in a mall. Very close to me. I'm like beautiful ordered online, and then I get the confirmation email, your shoe will be ready in four to six days for pickup. Okay, so I just go anyway, right, I mean, I'm like, come on, I just go anyway, because they said on the Store Locator that it was in stock. 

Michael LeBlanc  27:35

So, it was pretty clear to me at least that it was being picked from the shelf as opposed to being shipped there, which I would understand. So I get to the store and I'm like, hey, I boarded this thing. I didn't get a confirmation email, but I'm sure you have it and there's nobody in the store. Like there's two associates. One, they're very nice and, but they were like, hey, how are you doing and I'm like, and they're like, well, you haven't picked it yet. I'm like, okay, it's right there can you pick it for me, and, and, and, you know, they're like, okay, yeah, we could do that, but then the more interesting thing is, I started talking to the store manager and she says, You know, I love the fact that you're, you're you have to buy this, because I can't give you the one you ordered and you just have to ignore that one and let it lapse, but the good news is I get the credit for this one. 

Steve Dennis  28:17


Michael LeBlanc  28:18

I don't get the credit for the one you ordered online, picked off myself and it's literally the same pair of shoes in the same box and like why the hell would you disincentive. It's baffling, I just couldn't,

Steve Dennis  28:31

It's crazy. And I like I said, we've, we've talked about this for so long, so.

Michael LeBlanc  28:40

Right, like e-commerce is new, like we've been working at this for 25. You and I for 25 plus years I mean.

Steve Dennis  28:46

Yeah, yeah, yeah. It's very good. It's very disconcerting, but we're customer centric. It says so in the break room poster.

Michael LeBlanc  28:54

It was right there, right there in four to six days, we'll be customer centric. All right. Let's bring this, this part of the episode home, let’s bring this episode home. So, let's talk about, you know, really what it's going to take to bring this together, because I mean, arguing about these things, cannibalization and how you measure it's kind of like a little bit about let's have a big debate about gravity. So how do you bring this home for us and how do we think about this and leave the listeners with some advice? Maybe they're struggling with the same things internally.

Steve Dennis  29:20

Well, a few things. I think due to this topic, we just we just talked about I mean, it's thinking about, you know, getting away from the channel centric thinking, thinking about it from a brand perspective and then organizing yourself in such a way that you create this harmonious experience and that you don't put your store channel in competition with the online channel. So that's definitely one. I think the other thing which is really important is to start and we talked a little bit about this in an episode I guess last year, about understanding that stores you know, brick and mortar are no longer just places for customers to go, see what you have, pick it up and pay for it. Did it perform a much more hybrid or diverse role and I've talked to a lot of retailers about some of these challenges. 

Steve Dennis  30:08

This was a topic of conversation in my panel in Shoptalk Europe, because you know, suddenly you've got associates that are just waiting on customers, they are picking, packing and shipping items from the store, or they're held taking returns from online, all these kinds of things. So there's a whole operational piece of it, which has got potentially big implications in terms of space allocation and technology, processes, and, you know, compensation and, and all those kinds of things, but I also think we have to think more holistically about the store portfolio strategy for a given market, there's still I think, too many, we're seeing a little bit of change. At this point, we're still seeing a lot of kind of one size fits all strategies in terms of store deployment and I'll use an example I think we talked about a few weeks ago about IKEA. 

Steve Dennis  30:57

And I saw this when I was over in Europe as well and IKEA with these, you know, huge stores, which are destinations, by now starting to open these design studios. So, asking yourself, the customer, you know, what is the store for is a location for the customer to go there and see kind of everything you have, and take it home with them, is it there for them to go design a project and the product gets shipped to them later, is it there for more service functions or some combination. 

Steve Dennis  31:26

So, I think of a lot of retailers that are just kind of continuing to do this one size fits all approach and optimize it, in fact, need to get much more aggressive about reconfiguring the individual formats, perhaps for different, different roles and you know, that might mean a different location. That might mean a smaller size or a larger size. It may mean you know all sorts of different technology like micro fulfillment that we've seen Walmart and Target, and others adding. So, I think there's a lot of potential, potential change and understanding, really what physical retail is meant to do is more complicated today and you should reflect that in your strategy.

Michael LeBlanc  32:06

Well, great episode. Enjoy these episodes. I think our listeners do too, because it gets a chance to kind of riff or jam as our friend Carl Boutet would say. So, let's leave it there, because I'm sure it's not the last time we'll talk about this and I, hopefully we added some insight and you added some perspective for the listeners. So we'll leave it there.

Michael LeBlanc  32:25

If you like what you heard, please follow us on Apple, Spotify, your favorite podcast platform, so you can catch up with all our great interviews, including Judith McKenna, President International, Walmart. 

New episodes of Season 6, presented by our friends at MarketDial, will show up each and every Tuesday and be sure to tell your friends and colleagues in the retail industry all about us.

Steve Dennis  32:44

And I'm Steve Dennis, author of the bestselling book, ‘Remarkable Retail: How to Win & Keep Customers in the Age of Disruption’. You can learn more about me, my consulting and keynote speaking at

Michael LeBlanc  32:59

And I'm Michael LeBlanc, consumer retail growth consultant, keynote speaker and producer and host of a series of retail trade podcasts including this one. You can learn even more about me on LinkedIn. You can catch up with me on stage at Store conference in Toronto, May 31 and you can see both of us at the lead innovation summit in July. Live on stage in New York with our friend of the pod, Simeon Siegel from BMO. 

Until then, safe travels everyone.


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